11/3/2009 9:15:02 AM

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By Jeffrey Pieters

Post-Bulletin, Rochester MN 

A six-year plan calling for a cumulative 50 percent increase in Rochester sewer rates won unanimous city council approval Monday.

	Why are sewer rates going up? A slowdown in city development has reduced revenue from new connection charges. Higher rates are meant to make up the difference. How is my monthly rate set? Rates are based on a property's average water use over three winter months. What can I do about it? Rates are set annually, and the 2010 rate is set. Rate-payers can contact city council members. In addition, the city is setting up a study group to examine the fairness of the rate structure. That group will make a recommendation in time to affect the 2011 rate.

The plan will raise an average residential rate-payer's bill next year by about $1.64 per month, to $20.93.

Raising rates, a subject of council discussion for more than a month, is how the city plans to repay debt for a $75 million wastewater plant expansion at a time when new development has slowed.

Developers' connection fees were originally intended to repay a larger share of the debt. But with development currently paced at about one-fifth the level of a few years ago, fee proceeds are also about one-fifth the amount city leaders had hoped for.

The connection charge or Plant Investment Fee would have to be $12,500 per new residence, rather than the current $2,500, if it were to cover the amount intended in the last city plan, adopted in 2004.

Rather than increase the hookup fee, however, the city council decided to shift the burden to rate-payers. Next year's rate increase will be 8.5 percent.

Likewise, an 8.5 percent increase is scheduled for 2011, followed by 7 percent increases each of the four years after that. By 2015, the average residential sewer rate will be about $30.

The connection fee for new homes is also slated to rise but more slowly. It will increase $100 per year between 2011 and 2015 -- a cumulative increase of about 20 percent, compared to about 50 percent for rate-payers.

Study group appointed

Council members agreed to appoint a special study group to examine fairness of the rate structure.

The study group idea came in response to a proposal by council member Michael Wojcik, who argued that the connection fee should rise or that developers at least be held to higher standards for design and structural quality in exchange for what he said amounts to a public subsidy.

The standards Wojcik proposed included higher-density development, which is cheaper to serve with city utilities and services.

"Some people would refer to this as being 'green,'" Wojcik said. "I would say this is just a good long-term tax solution."

Wojcik urged fellow city leaders to "be serious" about the recommendations from the study group and to fill it with regular people as well as representatives of the building and development trades.

"Let's make sure this is a fair group," he said.

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